Monthly Archives: January 2007

Fallacy of the Marketing Driven Company

I’m hearing a lot of buzz on the grapevine about “marketing driven companies.”  Basically I don’t think this is going to work in most cases because the root issue does not get addressed, upon closer inspection of their strategy.  Until the root issue is addressed, the problems will remain the same.

 

Why is a marketing driven company a fallacy?  It’s not that it’s wrong, in theory it is the right thing.  It is in practice I have the issue.  A lot of the companies saying this now, saw how the CPG’s operate on a heavy marketing focus, with 25% of their costs going to marketing.  So they want the same thing, they want to be in front of people with brand names that can be recognized by anyone on the street.  But CPG’s do that because the channels they work in are geared towards that particular approach.  A company that is B2B, really should not attempt this approach, it’s too hands off to maximize profit impact.  If I’m buying dry wall, I want good quality, I’m not really thinking about quality so much when I buy a Nike hat, it’s the look.  How people interact with the brand itself should be the focus, and all too often, it’s not!

 

Secondly, these companies are often still silo based.  They have profit centers, business units or departments and people work in those areas and rarely venture out of their comfort zones.  To be marketing driven, for such a company, is really just wasting everyone’s time.  The root issue is not being addressed at all, so sales or marketing driven, doesn’t matter. 

Marketing is an activity, not a department.  For a company to truly be a marketing driven company, it’s needs to be a client driven company.  Each contact point has a marketing element embedded in it to re-enforce the brand promise.  That is a marketing driven company and until companies do that, the root problem will still remain and they won’t actually truly be, marketing driven. 

Next, I plan to discuss metrics in marketing.  I’m still working on it, I thought I’d have a little fun with the approach.

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Marketing’s Respect Problem and How to Solve It

MarketingProfs.com sent a great article out last week via newsletter by Kevin Hillstrom, titled, Are Marketers Underappreciated? You can read it by following the link.  In it and the article he references, the issue of marketing’s role in an organization comes into question and what value marketing brings and why it is not valued as much as most marketers feel it should be.  These articles and comments posted about them raise a lot of great points about what is wrong with marketing and why it really is part of its own problem.  The solution is already out there, marketing needs to adapt to the changing times and upgrade what it means to be a marketer with new tools and methods.  But first, we need to look at how this was created.

Most people in marketing come in via two ways, they stumble in or they went to school and learned it.  Those that stumble in do so in usually the creative areas, such as graphic artist who end up in ad agencies or writers who find they are great at ad copy.  This is really the advertising side of market, it is NOT marketing, but merely a piece of it.  Often this gets confused as marketing in its whole.  There was a time, way back in the 50’s, when it was pretty much marketing, but as times changes, so did marketing and it is merely one aspect of marketing.  I was at a company a few weeks ago that thought, logos and nice looking brochures were marketing and that’s it.  It was a hard sell because a lot of upfront education had to take place, basically showing them that 60’s of growth has taken place and new methods and techniques are available.  This kind of marketing suffers a lot from a lack of self analysis.  They can show you an ad and it may look good and a focus group may like it, but can they tell you what the bottom line impact is?  Often times, no, this hurts marketing, when you can’t demonstrate what dollar value you bring to the profit performance of an organization, you are basically a luxury there until lean times hit.  Some like to joke that they know they are wasting half their marketing budget and ineffective ads, they just don’t know which half.  This isn’t funny to the CFO or the CEO trying to justify the ad spending in tight budget times.  They need to show how those ads really impact the bottom line and a lot of times, this doesn’t happen.

Next you have those who went to school and got a degree in marketing.  Often the case here is, we are taught a certain school of thought in marketing.  That school of thought is what the professors likes or what the marketing department says IS marketing, which is often defined by which types of companies recruit from the school.  Once a student leaves school and enters a given industry, they learn the marketing methods of that industry and that’s pretty much it.  If they are lucky, marketing is seen as a profit performer.  If not, they end up in an organization where marketing is there but still struggling to define its importance to the bottom line and organization as a whole.  In such organizations, marketers are jokingly referred to (sometimes not) as the people who couldn’t count well enough to work in finance and could sell anything but were good at drawing inside the lines.

In almost all cases, marketing suffers from a lack of bottom line performance.  Even in marketing driven organizations such as CPG’s.  I remember reading a case study where a cereal maker launched a new brand with zero marketing efforts.  In 6 months it had the same market share as their average brands did, the ones they spent millions on.  If I were the CEO I would be pretty annoyed and looking at my CMO asking “what’s going on,” and demanding answers.  In many other organizations, marketing is there, it’s doing something, but the CFO really isn’t sure what it is.  The business world has changed, it is more metrics driven, people want to measure everything and most marketing departments have not kept up with the times.  The days where the 4 P’s were supreme are over!  A new P is king and that P is Profitability!

The fifth P calls for a new focus on what is important in marketing and that is metrics, the ability to demonstrate what works and why it works and how you plan on using it in the future to improve profit performance.  Nice looking ads are great, but you better be able to show why that ad is going to perform and what can be expected.  This also means as a marketer, you can’t rely on templates or one size fits all.  Your metrics are your weapons against your competitors.  Customize your metrics to fit your company, this means learning to listen.  You don’t have to be an expert in that industry, actually the reverse is true (if you walk in thinking you know it all, you your competitors will out perform you), and you have to be a good problem solver.  Gone are the days of the spinmiester.  Frankly I’m not sad, I can’t stand those guys either, you know the type “give me anything, I can spin it.”  Spin doesn’t translate into long term growth, neither do nice looking ads that have little impact or can not be measured.

The cost structure of marketing in all industries is up.  This is a natural evolution that now that marketing is a large cost, in some cases 25%, it is no wonder that companies are demanding more accountability.  But where do you start?  This can be hard, I know, I’ve done it, so let me share my experience. 

I entered an organization that was suffering rather hard due to market pressures.  Marketing was a fuzzy discipline with little bottom line accountability.  They talked about brand performance, and market share, etc… but management was saying “where is this all showing up in my bottom line performance, we are losing clients!”

All marketing efforts are about ROI, connecting with customers by understanding customer’s needs and ensuring a unique place in the market that results in long term profits.  A good marketer needs to be a good listener and problem solver before all else.  Know what your management is really asking for.  Usually, they want to know why they are paying you, what are your results to them.  This is your value statement in numbers, your ROI.  Take marketing outside the marketing department, the fact is, marketing is a company wide activity, not a department.  Each contact point with customers, I measured and demonstrated the impact marketing had on each point.  There are some measuring tools that you need to be standard, for accounting purposes.  But others were customized for the unique nature of the business.  This is where you need to listen, to clients as in not just the end users, but management and the people involved at each contact point.

Next you will need to create a historical database of ideas.  Keep records of all your marketing efforts.  Have a forecasted model developed up front and then an actual.  Go back and study them and any areas that did not perform as expect, go back and analyze until you know why the actual was not as forecasted.  Then the next the CFO says “why should I pay $100,000 for this new ad?”  You can go back and demonstrate the performance impact it had in the past, the ROI and actual bottom line improvement it provided.

Understand your market and competitors.  By market, I mean the world, keep economic and industry specific information coming in and sorting it for relevance.  Keep track of competitors, there response to each change and motivations.  When you see a competitor making a move, you can point out a very good reason why you should or should not counter, based on market information. 

Team up with all other departments, find ways to measure marketing’s impact on them.  I demonstrated how the new approach to reach customers actually cut operational turn over by half.  That’s a huge cost saving just by changing the approach to marketing, the ROI was very much demonstrated and so was the bottom line impact.

The brand performance is all about understanding and connecting with customers.  I developed programs that were intended to get customer satisfaction up; it did go up, 77%, which resulted in happy customers who wanted to buy more.  I can point directly to the actions taken and how it improved the brand performance which improved the sales performance and profit performance.  Add to that, I showed that ROI was improved by reducing the cost per sales transaction via this new approach. 

The market share for the company improved so much, they went from 16th to 7th in the world, even when out spent, the market efforts still held up against deeper pocket competitors.

Business has changed, marketing needs to change with it in order to gain the place at the table it has earned.  So far, in many companies, marketing has not adjusted to the new times; they still live in the past with weak performance measures.  It is my goal to make marketing what it should be, a strong performance driver where efforts are known and deliver results.  When my actuals were off the forecast, even when better than expects, I went and analyzed the situation to understand and build on that to do better next time.  What made it perform better, how can it be duplicated?  Never just rest on good results, always question why they were better than forecasted, the need to understand is important for the new way of marketing.

Build metrics.  NEVER rest on templates alone!  Yes, some templates are needed, just like in finance and accounting, you need certain tools that are standard in all situations.  However, look at the hedge funds who out perform others; they all have their own unique set of analysis and metrics that fits for their specific needs.  Marketers need this too.  I’m not a wiz at numbers, but I understand how to develop metrics that fit the needs of management’s goals.  Part of marketing’s job is to demonstrate the value, create the metrics that do that.  For many industries, you will have to design them anyway.  Always look for new ways that work best, but stay away from the herd mentality.

In the end, marketing needs to change, our mission for a company is to help manage change to meet the changing demands of our clients.  We can’t possible do that by not changing to meet the demands of the present.  Time to change.  If you want help doing this, you can always contact me.

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When Strategic Marketing Fails

Right now, the new CEO of Ceridian is about to face a proxy battle.  The second largest investor in the company wants to spin of Comdata, the very profitable business unit of Ceridian.  The investor, a hedge fund, claims that the unit can do better on its own and not dragged down by the weak performance of the other units.  When the new CEO did not jump to make the change right away, the hedge fund moved to nominate 8 new board members to basically take control of the board.  So now we get to watch a good old fashion proxy battle if most experts are correct.  The hedge fund’s actions are not so much my concern here, it is how marketing failed to keep Ceridian out of this situation in the first place.  If strategic marketing had done a better job, it would be sparing the company this mess.

 

When a single business unit out performs all others, the CMO should be alarmed.  When a unit out performs, such as Comdata has, the other units, it becomes an attractive spin off.  However, if you look at Ceridian, and having talked to some there, Comdata is a key piece to the services mix.  Basically, without Comdata, the other units are going to take a very hard hit.  The overall brand and product offering mix is going to change in an extremely disruptive way if the hedge fund gets its way.  The financial performance of the whole company will take a major hit as well as the ability to pipe in other services to new clients, making future sales, even harder.

 

Long ago when Comdata started to rise, the CMO of the parent company, should have found ways to improve the performance of the other units as well.  Not keeping Comdata down, but ensuring the other business units and their brands, were keep pace in terms of performance.  If they could not keep pace, those units should have been re-branded or spun off.  It’s a lot better to spin of a product line or business unit that is at the end of it’s lifecycle than a rising star, which is what Ceridian is now facing.  The CMO also should have found ways to better integrate the product offerings of other units with Comdata’s product offerings.  As well as implement a best of practice program to get the other units up to speed in performance, ensuring whatever Comdata was doing to get results, the other units would do too.  This would have ensured at least in the interim, that the situation would be a little more stable until a better solution could be found.  In any case, the CMO did screw up on this one.  It may not be the CMO’s total fault, many companies have an under appreciation for marketing or a lack of understand of marketing which ends up getting them later (more on that next article), At the level I’m describing, Ceridian should have focused a lot more on operational branding and tying in better marketing metrics to measure performance and keep a balance on the product portfolios performance.  It didn’t and now, its bread and butter business unit may be walking if the hedge fund gets its way.  Its other divisions also should have been put the flame to be more aggressive in growth and new product offerings.  Having used some of those products, they are not impressive and not market leading products, they don’t drive the marketing, they just play in the market, that’s not good.

 

Overall, someone dropped the ball on this one.  How much will this cost the company as a result?  That actually can be measured, I wonder if anyone did a what if analysis on that?  Chances are no, I’ve actually only ran into two companies that do this from a marketing impact point of view and one of them, I introduced to procedure to them.  This is another aspect of the puzzle, was marketing measuring the financial impact of it’s actions and its performance within the market place?  I have a binder on my book shelf with over 150 marketing analysis tools for that.  I could have used 6 and given them an answer in less than a week.  Why more companies don’t do it, I don’t know, but Ceridian is finding out the hard way that maybe it should have done that.  This is a great lesson on how marketing can fail a company in a big way by not alerting it to the possible dangers up the road.

Time will tell how this plays out.

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The Role of Aggression in the Creative Process

One area of the creative process that seems to be dying out, is the understanding of aggression in the process.  All too often, thanks to the political correctness wave that took over the corporate world, aggression was clumped in with violence and banned from the work place.  This is mainly due to the misunderstood role aggression plays.  However a company that truly wants to out perform, will understand and encourage the positive aspects of aggression. 

 

In most industrialized cultures, mixed signals are often sent in terms of aggression.  On the one hand we are told to be aggressive, be a go getter.  Yet on the other hand, we often look down on those who actually do this.  Especially in a corporate environment, they are seen as the loose cannons and get the pink slip on the next round of mass layoffs.  Also the political correctness group labeled aggression as the same as violence, believing that aggressive behavior leads to violence, which actually the complete opposite is true.  Let’s look at violence first.

 

Violence is an uncontrolled emotional flood.  If you see someone in the act of violence, you will notice that most of them are basically riding an emotional wave, they react, they don’t really think a whole lot either.  It’s just like a volcano blowing it’s top, as an observer, your best option is to just stand back and wait for the eruption to blow over and get out of the way!  Violence is destructive and lacking of control.  Yes violence is not what we want, but aggression has none of the qualities violence has.

 

Aggression on the other hand has a lot of focus and control.  If you look at the animal world, aggressive behavior is often used to avoid violence.  Animals seem to get what most people seem to have forgotten.  Aggression leads to action and creativity that is focused and controlled.   When someone acts on their aggression, they are not being violent, when they cross into losing control, that is not aggression because by its very nature, aggression is controlled focus taking an intended action.  In the creative process it is the focus of an intention to thrust an idea into a solution for a problem.  This is how aggression is suppose to be used in the creative process.  Here’s an example.

 

Let’s say Bob works in marketing and comes up with some ideas for a new product line that has been struggling.  He’s annoyed at the poor performance, so he gets aggressive and assertive and gets himself worked up and seeks the solution.  All creativity is aggressive, so Bob focuses all his efforts on creating a new approach to increase sales, he focuses on new styles, pricing, brand ideas, etc….  This is how it should work.  Now if Bob says “damn it” or gets on someone’s back who isn’t pulling their weight, look at how Bob behaves.  If his aggression is focused on the task and finding a solution, he’s ok, the person may also have needed a kick in the butt.  This is how aggression in communication is used, focused and NOT violent but determined and direct.  If Bob points out someone is not doing their job, that is not violent, I know some companies seem to think so, but it’s not. 

 

Now what if Bob couldn’t swear or tell the person to get it gear or take unorthodox ideas and test them for solutions,  over time all that aggressive behavior builds up until one day, Bob looses it and burst out at someone.  Of course this may be years down the road after that product line failed because Bob wasn’t allowed to use his aggression to solve a problem.  And chances are quite a few more failed products had pasted and finally he had enough and just lost it and let the emotional wave loose. 

 

It’s far better to let people express aggression at work, in fact you should want it, aggression is about getting things done that is focused, creative and meaningful.  And it avoids violence.  If you don’t understand the difference, then you better hope your competitor doesn’t either because if I’m helping them, you’ll need luck on your side.  Because I’m going to be inspiring their team to be aggresive in finding the solutions that customers want and driving sales up for them.

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Blog Bump

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Blog Bumping

What is a blog bump?  I’m getting emails asking that so I’ll explain.  Bumps are small commercials of 10-15 seconds, they are just long enough to have your name or tag line with a small big of audio and picture.  They are small marketing tools you can use just about anywhere.  So I decided to start posting some on here as a blog bump.  I could have just written an article but it was more fun to just make some.  It’s very easy, once I selected the pic and the audio file, it takes less than 2 minutes to make a blog bump. 

I have them hosted on youtube and could use them in other ways as well but with blogs becoming a wider accepted form of branding, I felt it was time to show a little blog branding of my own.  Plus, I like making videos and it was an great excuse to play around.

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Blog Bump

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